Chinese Private Equity Buys US OmniVision


May 6, 2015

A Chinese investment group has bought the US-based chip manufacturer OmniVision Technologies. The Beijing-based private equity group Hua Capital Management led the investment group in the deal that was worth $1.9 billion.


The Board Agrees to Sell
The Chinese consortium had first talked to the company last August, when it was reported the group was offering OmniVision $29 per share. In April, the company announced it has agreed to sell at a higher price of $29.75 per share and the board has now agreed with this decision.


The agreement gives the company a valuation of $1.9 billion, which highlights the competitive nature of the chip industry. The company has agreements with many of the biggest companies in the world, such as Apple. The annual turnover is currently around $1 billion, although, according to Optics, this doesn’t translate to a big annual profit.


The Californian company was probably attracted to the Chinese investment group for their expertise in the field. The private equity company specialises in investing in these semiconductor technologies.


Members of the Consortium
The investment group includes other big investment companies from China such as CITIC Capital Holdings. CITIC Capital Holdings, part-owned by the CITIC Group that is among China’s largest conglomerates, is currently backed by private equity wing of the Qatari sovereign wealth fund, Qatar Holdings.


Diversification and Growth
The two key visions of the company seem to now be about diversification and growth. The OmniVision chief executive officer, Shaw Hong, said in the statement, “With our new partners’ knowledge and insight and the added flexibility that we will have as a private company, OmniVision will be able to focus on reaching the next level of growth, which will benefit our employees, customers and business partners.” The company is hoping to venture into sectors such as automotive and medical imagining, which tend to offer more lucrative opportunities for chip manufacturers.


Hua Capital Management’s managing director, Yue Lin, told in the statement these emerging markets are a target for the business. “The world-class management team and employees of OmniVision have built a global leader in digital imaging that is well-positioned to capitalize on fast-growing market opportunities in automotive, security, entertainment and the Internet-of-Things, while continuing to expand their market leadership in mobile phones,” Yue Lin said.


A Few More Hurdles
Before the deal is finalised the participants have to receive an approval from the shareholders of OmniVision as well as an approval from the anti-trust bodies in the US and China. Since it is an investment from abroad, the US Committee on Foreign Investment must also approve the deal. It is thought the deal might be finalised later this year or in the early stages of 2016.


Increased Chinese Involvement
Chinese companies are emerging as key investors in the global markets, with China’s Premier Li Keqiang urging companies to invest abroad as the economy at home slows down. Technology companies and investment firms have embarked on a number of acquisitions of US-listed chip manufacturers. For instance, RDA Microelectronics was recently bought by a Chinese state-owned firm, Tsinghua Unigroup, in a deal worth nearly $1 billion. It is likely that Chinese private equity firms will continue to make their mark around the globe in 2015.


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